Tax Credits for Energy Efficiency

Posted on 02/23/12

Did you know that you could save big bucks by installing “green” home improvements such as an energy efficient roof and insulation, a geothermal heat pump, energy star windows and/or doors, or a small wind energy system?

Here’s the breakdown:

A small wind energy system consists of a small turbine which gets wired into your home’s electrical grid. As the propellers turn, the turbine produces kinetic energy which is then converted into electricity. This nifty little contraption could lower your electric bill by at least 50%, or $600/year, and can generate 30% – 80% of the electricity needed for an entire household. It’s also eligible for a 30% tax credit for the total cost of equipment and installation. A wind turbine is a good investment for households which average at least $150/month in electric bills. And of course, it doesn’t hurt to live in an area that produces relatively good winds.

Don’t think that because it’s called a geothermal heat pump, it only produces heat. In fact, a geothermal heat pump serves as a replacement for the more traditional HVAC system. On top of that, installing one makes you eligible for a 30% tax credit. And because it uses 25% – 50% less electricity than a traditional HVAC system, so you can save about $600/year on heating and cooling costs.

Anyone who has ever lived in a drafty home understands the importance of good windows and doors. For storm door or standard door replacements, you can claim up to a $500 tax credit. For storm windows or standard window replacements, you can claim up to a $200 tax credit. For skylight replacements, you can also claim up to $200. The only pitfall to this is that 2011 was the last year you could install to qualify for these credits.

Of course, energy efficient windows and doors will perform much better in a well insulated house. If you added insulation to your home in 2011, you could qualify for a tax credit up to $500.

If you installed a new heat efficient metal or asphalt roof to your house in 2011, then you could qualify for a $500 tax credit.

And last, but certainly not least on the list, is a non-solar energy efficient water heater. If you installed on of these in 2011, you can qualify for up to a $300 tax credit on equipment and installation.

To determine if the system or systems you installed qualify for the above mentioned credits, visit the Energy Star Website. Make sure you save, or have saved, all receipts and certifications for equipment and installations. And finally, file Form 5695 with your tax returns this year.

If you are thinking of selling or buying a home in the Northwest Region of Florida, contact The Veach Team for a complimentary consultation.